Wheatley Corp. is analyzing the possible acquisition of Romney Company. Both firms have no debt. Wheatley believes the acquisition will increase its total aftertax annual cash flows by $$2$ million indefinitely. The current market value of Romney is $$43$ million, and that of Wheatley is $$89$ million. The appropriate discount rate for the incremental cash flows is $10$ percent. Wheatley is trying to decide whether it should offer $40$ percent of its stock or $$61$ million in cash to Romney's shareholders.

a$.$ What is the cost of each alternative? $(12$ marks$)$

b$.$ What is the NPV of each alternative? $(8$ marks$)$

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